This is a Reference Guide to accompany the Top of Mind with SIFMA Insights podcast, “September FOMC Rate Pause – What’s Next?” Inside, we define terms and provide charts for topics we discuss in the podcast including:

• Fed Funds Rate: Currently 5.25%-5.50%. Interest rate at which banks lend money to each other, typically on an overnight basis. Raising the target rate reduces the money supply and causes other market rates to rise, dampening consumer and business spending, slowing economic activity, and reducing inflation.
• Inflation: Currently, CPI 3.7%/Core CPI 4.4%/PCE 3.3%/Core PCE 4.2%. Reflected quantitatively by an increase of an average price level of a basket of selected goods and services in an economy and represents the rate of decline of purchasing power of a given currency over some period of time.
• Credit Tightening: The regional bank turmoil in March led to a widening of credit spreads for regional banks. Wider spreads increase the cost of borrowing, thereby limiting lending. Regional banks spreads increased 77.1% from the low for the year early in the turmoil and peaked at +123.8%. Spreads remain elevated today for regional banks, +42.6% to the low but -36.3% to the peak.

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Author

Katie Kolchin, CFA
Managing Director, Head of Research

Related Resources

• The SIFMA Podcast

  Podcast: September FOMC Rate Pause – What’s Next?